Personally I find it difficult to sight read and play an instrument.

The main problem with transcriptions (whether dots or tab) is that they'll only give the notes, not the tune. (look at St Anne's Reel if you want to know what I mean).

They're both useful, and are good learning tools, but ultimately if you don't have the ear you'll end up in the Hedgehog Song (You know all the words and you sang all the notes but you never quite learned the song, she sang)